Transcription
Want to know the exact steps to starting a vending machine business in 2025? I'm going to show you everything, from finding your first location to picking your first machine to scaling this into an operation that is a passive income empire. I built a $50,000 per month vending route and helped hundreds of others do the same. And the best part is you can start this business with less than $1,000.
I'm Mike Coffman, and this is your complete guide to starting a vending machine business in 2025. In 2025, vending machines are going to be more profitable than they ever have been. The reason why is not because they're anything new; vending machines have been around for decades, starting even in Japan way before they made it to the US. Why they're going to be so profitable in 2025 is because of the revolution of unattended retail. This revolution is going to be valued at over 40 billion dollars by 2027—that's literally two years away.
So what do I mean when I talk about unattended retail and the revolution of vending? What I'm talking about is the ability to put anything in a machine or in a micromarket that doesn't require a motor or entering in a code on a traditional vending machine. We actually had a traditional vending machine that had the motors that spiral down the Snickers, and the buyer had to enter in a code and swipe their card. That machine in an apartment complex, Lex, did $1,200 a month in revenue. That same property, we swapped out that traditional machine with a new smart machine, and within 60 days we doubled the revenue to over $2,500 a month. It was the same exact location, same amount of foot traffic, but it did 2x the revenue. The reason why unattended retail, in that new modern machine, we could put things like Tide Pods in there; we could put burritos; we could put DayQuil, NightQuil—anything that was going to increase the transaction value by over 2 to 3x a traditional machine could do. This is why I'm so bullish on unattended retail in the future.
Think about it: We all go to the grocery store, and if there's a huge line in front of the checkout lady, what do we do? We go over to the self-checkout kiosk, take our items out of our cart ourselves, scan them, pay, and walk away. This concept is here to stay, and this is why unattended retail is going to be the future of vending. When you land in the Las Vegas Airport these days, you come down the giant escalator with the sign that says, "Welcome to Las Vegas." Guess what is at the bottom of those escalators? A giant 7-Eleven that has zero employees. This 7-Eleven, you have to swipe your credit card for the gates to open; you walk in, grab whatever you want at the 7-Eleven—grab your soda, grab your bag of chips, grab your Pedialyte—and once you walk away, you literally have to pay as the AI cameras track everything you grab, and the gate will not open until you've already paid. Think about that for a minute. If you had an employee in the 7-Eleven at that Vegas airport at $25 an hour, and let's say it was open for 10 hours a day, that would be over $250 of just labor expenses that no longer are required for 7-Eleven to operate. This is the future of vending, and this is why unattended retail is a $40 billion industry within the next two years.
Now that you're thinking about unattended retail and all the opportunities that it can bring you, let's actually dive into some of the numbers and see what the heck is Mike even talking about and is this even realistic. So what I'm going to do is I'm going to share my screen right here, and I'm going to show you machine by machine how these machines are doing on a daily basis. So if we look at the screen here, you'll see daily revenue on the dashboard and yesterday's revenue. Okay, every one of these lines is a different machine. So we'll start with this first machine that did $41 yesterday, and you might think, well, how does that even—it's 41 bucks—does that even mean anything? $41 from a machine is over $1,200 a month. Okay, that's going to be your country club membership or your kids' college tuition fund. Then we go to the next machine: $193 yesterday; it's already done $50 before 10 a.m. this morning. $193—do the math on that, 30 days, do the math on that, 365—that's more than a $1,000 W2 salary. These machines, as we go down, you can see $128, $108—all these machines now, because we use smart machines with this micromarket concept, allow us to give flexibility of what we want to put on these shelves because it's not what fits in an old-school vending motor anymore; it's literally we can put items that cater to them.
So when you think about Walgreens announcing last week that 1,200 stores—1,200 stores—are going to be closing down over the next year, all those residents at an apartment complex or all those employees on a work trip that want to go over to Walgreens to get some DayQuil or NightQuil or get a phone charger or even that cough medicine or cough drops—all those things we put in our smart machines now. So in this case, what you're looking at with this dashboard, we can actually make products be specific to the time of year. So in the winter, we'll do things like hand warmers, things like all the cold-season flu items, and then in the summer we'll literally put in things that are going to be impulse buys, like sunscreen. We put in $12 bottles of sunscreen that cost us $1.50 from our distributor—that's literally over 500% margins—and this is what you couldn't do with traditional vending machines.
So if we look at these items here, you're probably thinking, okay, $128, $83, $68—how much of that is actually profit? So if I go in and I want to share a new window for you, let's actually break that down. So you see here we got $128, $83, $108—how much of that is profit? Okay, $108 times 365 days—that's literally you can do the math, but that's over $30,000 in a machine. So let's say we do $108 in revenue yesterday with this machine. 30% to 35% is our cost of goods. So for every Celsius we buy for a dollar, we're probably selling that for three to four; so 30% to 35% cost of goods. So right away, of that $100, we got—let's just be conservative—$35 cost of goods. Okay, we got another 10% of transaction fees in merchant services. So, so with these smart machines, you have to use a credit card; as a result, the AMX and the merchant services is around 5%, and then the machine's going to charge you a Wi-Fi and SaaS fee of around 5%. So we're looking at right around $10 of services, and then the rest is your profit. So this is why your margins are always around 50% to 60%, depending on how well your cost of goods are. So of that machine that did $108, $60 to $70 is profit. Okay, so if we go back and we look at this dashboard, you can see $111, $78, $128—literally, if we have three machines that are doing $90 a day, that's the equivalent of $100,000 in profit a year. And so that's where you want to find the right locations, which we'll get into next in our next chapter. But at the end of the day, we want those right locations because we don't care how many machines we have; we care about the revenue per location. So we want the A+ locations, not the terrible Jiffy Lube type locations.
So now let's dive into our next chapter; we're going to talk about the right locations. So when people reach out to me on social media, they always talk about, "Oh, Mike, I have three machines." The first question I'll ask when they tell me that is I'll literally say, "What is the revenue per machine?" And their answer will blow your mind: "Well, that machine's actually sitting in my garage." This drives me nuts. Everyone wants to jump to choosing the right machine when they need to first find the right location. So how do we do that? That's what we're going to discuss today. There are three key factors that make a location profitable. Those factors come down to three simple things: The first one is going to be parking lots. What do I mean by parking lots? Is their parking lot full? If so, that's going to make a great location. When I talk about, "Is their parking lot full?" If you're going to a property—a medical office, a hospital, an urgent care, a pet hospital—if their parking lot is full, nine times out of 10 it's going to do really well with a vending machine. The second thing is also going to be availability. What do you mean availability? Availability is all about: Do those people at that office building where you put that micromarket in, do they work from home? Do they work from home on Mondays? Do they come into the office on Fridays? Are they even around the break room to see your micromarket? And if not, the availability is going to be terrible. And then the third thing is going to be visibility. You want these machines to be in the best spot possible. So think about it: If you're in an apartment complex, sure the parking lot's full, sure people live there 24/7 and are going to be there on the weekends, but guess what? That apartment complex might be garden style, and it might have a centralized clubhouse where you put that vending machine, but everyone literally drives up to a separate building to go to their apartment, and the mail and the Amazon packages are being delivered directly to their unit; they're never going to go to the clubhouse and see your vending machine. There is no visibility, and definitely not going to be profitable. This is why I think it's crucial when you map about what type of locations to look for to think of those three things.
So when we talk about parking lot and availability and visibility, let's actually use a real-world example. So let's pretend that I live in Scottsdale, Arizona, and I want to build a vending route, and we're going to do this together. So I'm going to go to Scottsdale, Arizona, and I'm going to think through all the types of places that are going to have high foot traffic. One of the types of places I like to look on Google and Google Maps is going to be manufacturing plants. And the reason why I love manufacturing plants is because they're not sexy; they're not a high-rise luxury apartment that everyone and their dog wants to put their machine in; they're actually more blue-collar with a lot of people that work multiple shifts. So think about it: You got your 7:00 a.m. to 7:00 p.m. crowd; then you got your 12:00 p.m. to 12:00 a.m. crowd; and then you got your 7:00 p.m. to 7:00 a.m. crowd. So if you have a micromarket in a manufacturing plant like here in Arizona at, let's say, United Dairymen, you're literally going to have people that are going to go to your micromarket when they get off their shift at 7:00 a.m.; they're going to love their Sunny D and breakfast pastry or breakfast bowl; they're going to get out of your micromarket freezer. Then you're going to have your lunch crew, the normal crew that's going to want to come in, get that salad or burrito alongside their energy drink. And then you're going to get the night crowd, which is going to love the end-of-shift type crowd that's going to want something to unwind the day; maybe they want that chocolate or that ice cream—things that are literally going to give them a craving before they go home and go to bed. And so when we talk about this manufacturing plant example in Scottsdale, I do that Google search, and I'm on Google Maps; I can literally go to their website, and as you can see here, huge buildings, a massive parking lot, and I can scroll down, and the people I want to target are going to be in the HR department, and bingo—right away I see a phone number; I can contact them and immediately call and ask for a meeting with their HR department to ultimately talk about that hidden gem location.
The other thing you want to think about with this is like the best types of locations for beginners. And everyone wants to think about, okay, well, what type of building or what type of parking lot? Wrong. If you're a beginner and you're trying to break into this game, your network is your net worth. And so I'm a huge believer of going into your network and thinking about, who are people I know, or my mom and dad might know, or a friend might know, that can get me into a high-traffic location. So if I'm in a location that's like a—or I'm in Scottsdale and I have a roommate that works with car dealerships—bingo—right away I'm going to ask my roommate, "Hey, can you get me a meeting with the general manager? I would love to talk to them about putting a modern machine in their car dealership." Or let's say you have a sister that works at the YMCA, or you work in an office building where you have the accountants on the first floor, you're in some office on the second floor, there's a third, fourth, fifth, and sixth floor—bingo—you can literally go to your property manager and pitch them on the idea of all of these business people with their own separate offices coming through one centralized place to work will need a snack or a drink, and there's no better way than to put a smart machine in the lobby of that business office. And that's why I'm a huge believer for beginners to tap into your network to get your first location.
Now, what are some red flags to watch out for? This is where I'm always really picky about the type of locations. I don't want five locations doing $200 each per month; I want one location doing $1,000. You want quality over quantity; you're providing a service, so you cannot be afraid to walk away. Are they grilling you about revenue share, and they want some absurd number? That's a red flag. Second thing is: Are you concerned about foot traffic? Did you get a hit from one of your friend's intros, and you show up at the building, and the parking lot's empty, and there's literally no foot traffic when you walk around there on a Friday at 2:00 because everyone's working from home? That is a giant red flag. Or you go to that apartment complex, and they really want to put this machine in the clubhouse, and you notice that the clubhouse is never used? That is a giant red flag, and you've got to be okay with walking away.
Now let's say you do find that home run—that's an apartment complex; one main entrance; parking lot is jammed—how do we approach them? My first recommendation with approaching these places is talking about the amenity first. You want to sell on value, and the value here is an amenity. You can give them a revenue share, but if a machine's doing $3,000 a month and they're getting 10% of that on the high end, that's only $300. This isn't a revenue opportunity for a property that—like I'm not going to talk about the $300 a month that they're going to get from an apartment complex that rents out units at $3,000 a month—like it doesn't make sense. You want to play up the amenity. They don't want their residents to go to the 7-Eleven at 2:00 a.m. with the ability or the risk of potentially something happening to them as they cross the street that late at night just to get a thing of ice cream or a Snickers bar. So the amenity angle is going to be what really is going to resonate with those property managers of both businesses, but also apartment complexes or any in between. Some of the exact scripts I love to use when I reach out is going to be all about a luxury amenity, especially these smart machines where there's locks; they don't have to worry about theft like an open market. But the other side of this too, with regards to when you reach out, is it's no cost to them, and I think that's something that's super powerful because they're literally getting access to this fancy $77,000 machine with no cost to them, and that really resonates because they don't have budget and their operations budget to pay for something like this. And so that no cost is going to be huge. The other thing I don't like is anything that has a minimum because a minimum means there's red tape, and no one likes red tape. So just bang the minimum, and you'll be fine. After you pitch the amenity and they're intrigued about this new fancy machine they've never seen before, now it's time to close the deal. And this is how you can really close a deal is to handle objections. You might actually give them a little bit of a revenue share, but you're not going to lead with it. The only reason you're going to give them that is because that's going to handle the objection of them asking for it after you're already down the line with them. The other thing is is if you give them a revenue share, they're going to help you want to market the machine to their residents or their employees that much more because they're getting a kickback from it. But the other side of this too, with regards to contracts and objections on contract terms, is set a 30- or 60-day out on the terms. And the reason why you want to do that is because if it's a bad location, you're going to want to pull that machine as quick as possible. So that 30-day out on the contract can help you just as much as it can help them, and that's actually a good thing. So I never get worried about contract terms; I also never get worried about if they ask for specific insurance requirements; you can push back on that as well because at the end of the day, you're not a window-cleaning business that's going to be up in a boom box on their property; you're literally dropping off vending snacks and drinks. So insurance requirements are super B flexible with. And so at the end of the day, that's how you handle the common objections; that's how you negotiate the deals with the 30- to 60-day terms on the contract. And now we're going to go into Chapter 3 and figure out what type of machines do we put in those properties we just talked about. All right.
So now that we've talked about the future of vending with unattended retail and what the best locations are for your first machine, now we really need to deep dive into what kind of machine should we actually put in that location. So we're going to get nitty-gritty; let's do it. First thing we're going to talk about are what are the different suppliers of machines that are out there. Okay, so when I bought my first machine with zero money down, I actually used a company, as you'll see here, called EVend. Okay, the reason I loved EVend is it was zero money down, and my first payment wasn't due until 90 days after it was delivered. So think about that: It wasn't 90 days after I ordered it; it was literally 90 days after it started doing sales on day one. So with that zero money down, I could get these machines that cost anywhere from $5,000 to $6,000 at no money down, do a payment plan over 60 months—no different than going to finance a car—and then use the cash flow and the profits to pay off my machine after a year. Okay, so with EVend, when we get into EVend, you're probably thinking, well, what kind of machines do they provide? Well, the best part about EVend with their no money down is they actually provide outdoor machines. And when you look at EVend's outdoor machines, as you see on this screen, you'll notice, "Oh, wow, those things are huge and actually bulletproof." And these are the types of machines you want to put in locations where they have to be outside because of the climate. They're not picking this machine because aesthetically it's as sexy as a smart machine or a micromarket; they're putting this machine outside because it's at a hockey rink or YMCA that wants all the foot traffic that's outside with those kids to be able to have access to a machine. Okay, the second type of company I like to work with is going to be Cantaloupe. The great thing about Cantaloupe is they provide a lot of flexibility when it comes to the type of micromarkets they provide. Okay, so if we look at these pictures here, you'll see this first micromarket; you've probably seen this before in some type of employee break room or at a hotel. And the thing I love about what Cantaloupe provides is they will actually make the shelving and the aesthetics of the signs and signatures across the top blend in with the type of property. For example, you look at this apartment complex where this micromarket and this gentleman's grabbing the salad, and they actually matched the font.
And the shelving, with the carpet and and the lobby's aesthetics. The other thing I love about micromarkets is the flexibility. Just like Tetris, you can make these as big or as small as possible. So if you're literally crunched for space, you might literally have one shelf or one fridge and a checkout kiosk, and that's it. Now you're thinking, "Well, why wouldn't I just grab something and walk away from this without paying for it?" That is why, with these micro markets, the downside in a lot of cases can be theft.
And so with that, what I like to use these types of micromarkets that are considered open micromarkets for are places you're not going to have to worry about theft. Where do you not have to worry about theft? Employee break rooms. You want to know why? In all of our break rooms where we have micromarkets, we have the human resources department put a sign on our micromarket, and all it reads is, "Theft will not be tolerated and can lead to termination." If you're an employee coming in the break room to grab a sub or a sandwich, if you see that sign, you're not walking away with that sandwich; you're going to the kiosk to pay for it. The other great thing about these micromarkets in break rooms is you can run promos. And so sometimes what we'll do with these businesses is run a promotion where the employee of the month, who might stay on Fridays the latest or might come in on Fridays more often than everyone else, we can give them a $10 credit, split it five and five with the employer, and now that person's coming into the market on a regular basis after using their free $10 credit.
The next type of machine company I'm going to dive into is 365. 365, like Cantaloupe, is another leader in the market space, but they're a little bit cheaper of an alternative when it comes to their micromarket. So if you look at some of these examples here with 365, the reason I like them is they can be really small and efficient, but they're also very cost-affordable. So if you're going into a business or an apartment that's not really that luxury and they really don't care what it looks like, you can go in with a cheaper kiosk and a cheaper setup for the same ability to offer all kinds of vending snacks, sandwiches, and drinks. So in this case here that you're looking at on the screen, this is a fridge with a snack shelf next to it, and what you'll see, you also see some different medicine, some different ChapStick and things across the top. So you just—it's shelf space; you got flexibility to put whatever you want across anywhere. But the other cool thing here is you don't have to pay $5,000 for a checkout kiosk. You can literally grab your bag of chips over here, as you can see with my cursor, and just scan it on the door of the machine, and all you're paying for is the point of sale that comes with the refrigerator and not the bigger kiosk point of sale like you see over here with the big 32-inch screen. So that's the third company, 365. Again, you're probably thinking, "What about theft?" That's why I like these open markets in places like employee break rooms where you can put in a camera and you can also put up a sign about termination, uh, working with their HR department on that.
But if you are worried about theft—like an apartment complex, someone coming in late at night and you're worried that they're going to come home from the bar intoxicated and go raid your machines or your micromarket—in that case, I would actually do more of a smart machine. And if we're—since we're talking about 365 right now—you could do something like a Stockwell, where you're literally—um, same concept, but the doors are locked. So if you come in—coming home from the bar that night and you got the munchies—you actually have to put your credit card on this door to unlock the machine. Once the door unlocks, there's AI cameras that are going to use smart sensors to track whatever you grab. So if I grab a bag of Takis and some laundry detergent pods and then a Gatorade, when I walk away, those doors will automatically shut and charge my card that was used to unlock that door. And so it really does a really good job of preventing theft because the doors are locked in the first place. The other side of that, you might be wondering, "Well, what about inventory or what about digital screens?" And that's why I'm bullish about a fourth company.
So if we get into a fourth company, I'm going to talk about is going to be Micromart. And the reason I'm really excited about Micromarts is they give you the flexibility to ultimately build—build out micromarkets that are locked with digital screens. So if you look at Micromart, you can see here on the screen they got all kinds of digital ads across the top. What we like to do outside of just the digital ad piece is we like to run b-roll. So for our route in Oregon, for example, we'll do a lot of b-roll of the Oregon coast, of Mount Hood, and the Oregon Cascade Mountains. We also run b-roll of maybe athletic facil-type content of different pro or college teams in the area. And then the fourth thing you can do is you can run the property's logo across that screen. So these are digital screens that can run whatever you want. So as you can see, it says snacks, drinks, and fresh meals, but we might want to put ads up there; we might want to put—like, for example, when we—for our route in Chicago, we'll have the Chicago skyline and run some stuff of the Lake Michigan and the Navy Pier there—um, but you can literally run anything you want across those screens and just Bluetooth it. The other cool thing about Micromarts is you can start with one. If you have that tweener location like we talked about in the last chapter, or if you have that home run location that you know is going to get crushed with foot traffic, you can do three, like this example here, where we got a combo of snacks, a combo of fresh FR food and drinks, and then a combo of just—uh—microwavable, heatable meals—um, as three different machines.
In summary, I think for me, you got different types of machines for different types of purposes, and this is why ultimately it's not about what machine you get but the type of location of where it's going. So if we recap: number one, EV Vending. The reason I like EV Vending is the zero money down. The other reason I like EV Vending is going to be because they have a great outdoor machine for places where people want a machine out by the pool or somewhere where condensation, humidity, any type of weather can impact that machine. Then we go to the next company, Cantaloupe. I love the aesthetics of the open markets with Cantaloupe; their customer service is also really good. Um, the downside is a lot of people might be concerned about theft with the Cantaloupe's open markets. Third company, 365, also another micromarket manufacturer that has their own point of sale and merchant services as well, and then they have the smart machine with the Stockwells. That's a big—uh—selling—that's a big aesthetically looking machine for luxury places. And then the fourth one, which is an up-and-coming machine company that I think has a future that it has a ton of upside with their ability with the digital screens and the backend user interface, is going to be Micromart. And that machine company also has a locked door so it prevents the theft while also still giving the micromarket vibe. So as you can see, those are the favorite companies I like to talk about when choosing our machines.
Now, before we continue, if you want to FastTrack your success and avoid the costly mistakes I made starting out, I have something special for you. I've created a private Community called VendingPreneurs where we do all the heavy lifting for you, from location scouting to helping you negotiate deals. If you're interested in learning more, there's a link in the description to learn more. Now let's get back to the training. All right, so now that we're back into—we found the locations that are good for us; we know what type of machines we want to put in these locations—time to start thinking about the bigger picture. Well, Mike, what do you mean by the bigger picture? What I mean now is you're becoming a real business. So now, just because that local barber shop that you go get your haircut said yes to a vending machine, now you got to think about all the operations and management of building a vending route.
So the first thing I recommend when you start to build a vending route is figuring out what the actual best business entity is for you. So for me, when I got started, I set up an LLC, being Mr. Passive. I wanted this to be as simple and as quick as possible. So the first thing I did when I got started setting up that LLC is I went to a company called Incfile, which is now owned by BSY, to form my LLC and the state I live in with all the right documents I needed. Okay, so I needed the right setup with regards to operating agreement, articles of origination, even to the point of getting an EIN for tax purposes with W9s if you start doing revenue shares with properties. And I was really passionate about how do I get this filed as quick as possible with the least amount of time. So when I got started, I think my cost of getting it filed was like 250 bucks with all of the Articles and business documents I wanted, and that thing went live within two days, so it was very, very simple.
The next thing I did outside of setting up a business is I focused on insurance. Okay, well, what kind of insurance do you need to run a vending machine business? First thing you need is business liability insurance. Okay, the second thing you need is going to be some type of automotive or automobile insurance, not because you have a car for work; it's more for these properties; they're going to want automotive insurance on top of your general purpose and liability insurance. And then the third kind of secret insurance that I highly recommend, and this is going to be probably the most important tip when it comes to insurance, is get Marine layer insurance. Why would you need Marine layer insurance? Marine layer insurance is what protects you in that six to seven to eight-thousand-dollar machine you just put into that property. So if you have a machine that gets broken into in the lobby of a property 'cause some homeless guy off the street saw all the snacks in there and took a crowbar to your machine, if you have Marine insurance, you will be reimbursed for not only the inventory but also the machine costs. And so I highly recommend that you focus on Marine layer insurance on top of the required insurances that properties are going to require from you, which is going to be general purpose, going to be liability, and automotive. Take my word for it; invest in the Marine layer. And if you're curious about different sites, you can think of going to like NextInsurance.com; you can go to Progressive; you can go to Hartford; you can go anywhere online, type in the type of business, the type of industry like vending or food and beverage that you're in, and they will give you insurance quotes. And I'm a huge believer in getting two to three quotes to shop, and then you'll be able to get those policies set up and ensure the business you just formed through Breezy. The cost of insurance can be around 19 to, let's say, $30 a month for covering both the business on the liabilities but also let's say your first machine or a couple machines with Marine layer insurance, so it's totally worth it to make sure that you're focusing on those insurance requirements.
The fun part now that you have a business that is insured is actually tracking all the sales, and that's why I love getting into this because you can go down into the weeds of what's actually selling at your machines for what margin. So what you'll notice here, if we use like I talked about in Chapter 3 those micromart machines and we dive in to the sales by the products or even the transactions, and what you can see here is you'll actually see what's selling in your machines. And the reason this is so important when it comes to inventory management is because you want to double down on what works. So if things like Smartwater, in this case, and Fairlife protein shakes are selling so well, and even take it a step further, the Gatorades and Celsius—is what that's telling me when I look at this—is people like healthy options at this place because they're drinking a lot of water, a lot of high-end protein shakes, and Celsius, but also they love drinks in general. So if you have a machine with five rows in it and three of them are drinks and two of them are snacks, you might have actually switch it and make it four drink rows because now you'll have more capacity. But to take it a step further, you're going to double down on the categories that are selling. So if you're selling 40 Gatorade fruit punches, like you see here with those kind of promising margins, why not put in Gatorade Zero? Why not put in Gatorade orange Gatorade, whatever, and double down on what's working? Same thing with Smartwater; Smartwater is selling 82—82 Smartwaters this month—why not put in Perrier? Also put in Dan, even Vitamin Water, because at the end of the day, what these people really enjoy is hydrating with those drinks and double down on those things. And then if we get into a layer below that, you look at the—the first food on this list is a Twix and Reese's. So people that are coming to this machine for actual snacks love chocolate, and that might be because it's the winter, but it also might be because they just want a candy bar. So double down on candy bars; maybe you pull out a couple of those chips options and add four or five more candy bar options alongside the Twix and the Reese's. You might put in a Snickers; you might put in a 1000 Grand; you might put in a Milky Way, but whatever, double down on what's selling, and that's the beauty of inventory management. And the big thing with inventory management is you always want to be two steps ahead. So if we know Smartwater in this case is such a top seller or protein shakes, we want to make sure our weekly or even monthly pallet order is going to have extra of those top sellers because we want to double down on what's working, even to the point where you might pull a row—let's say it's a row of Coke—and put an extra Smartwater row in there just so you have double the volume of capacity if those Smartwaters are selling out ahead of your stocking schedule.
Now, how often should you stock? This is another question that people always ask me, and I'm a huge believer in stocking before it gets empty. So if you have a row of 14 Snickers and you've sold 12, there's still two Snickers in front, customer-facing, out of your machine, well, you can get ahead and stock the rest of that row or those 12 empty slots before that machine is showing completely empty. And I'm a huge believer in customer service and showing people that old-school vending that don't know how to use phones and track inventory remotely is outdated. So we can get ahead of these things and go by and do what I call a lot of top-offs. Now, top-offs are going to be where you literally go by the machine for maybe 15 minutes every other day or every third day. And when I say you—your operator—if you hired an operator like me, but you go by the machine more frequently and spend less time there. And the reason I love top-offs is because then you're not there for an hour after the machine got raided every single weekend, and you're showing up on Monday spending an hour there. You might literally go by Friday, do a quick top-off, so then Monday is just another quick top-off, and it's not Wednesday to Monday; it's now Friday to Monday, and you're only two to three days every time you go by and do a quick top-off. And this is why I'm a huge believer in being proactive with your inventory management, but it also—with your restocking procedures—makes it way easier. Think about it this way: I look at this inventory list; I see, okay, we sold x amount of Smartwater, x amount of Dr. Pepper. I can even change this report to be every two to three days, and the best part about that is when I go in and see what's low, I can go into our warehouse, as you can see behind me with a couple buckets, I can load up what is low, throw it into the bucket, throw in the Smartwater, throw in the Twix, whatever those items may be, and whenever I'm out and about, I can go polish and do a top-off at that machine, so then I'm always making sales and nothing is sitting there empty.
I think the other thing to think about is also the analytics of your profits. Okay, so when we get into the great things about looking at this dashboard, at the end of the day, profitability is the metric; revenue is not the metric. Okay, so for us, we know drinks you can charge more; there's no shelf life expiration like a snack that's typically—chips are 90 days; fresh foods even less than that, let's say seven days for a salad—but also the great things with drinks—um—as they last longer, and then ultimately you can really double down on what's working. And so for us, if we have a machine that's got five rows, rather than doing three rows of snacks, candy, and fresh food, we'll always typically do a majority drinks, so three rows of drinks—like a whole row of water, Gatorade type options, a whole row of energy drink options like Celsius and Alani, and a whole row of healthy recovery options like a protein shake, a C4—um—anything like this Fairlife you see here—but then you can add in maybe a one row of snacks and chips and then one row of—of candy and/or fresh food. So some of the fresh food options we like with longer shelf life are going to be a lot of meat and cheese burritos for breakfast; a lot of these steak chili burritos do really well for us with lunch; even simple things like—we—we have a machine in a taxi office where taxi drivers come and go all the time, really frequently; they're always in the car, so they need something quick like a burrito or even a Lunchable that has really good margins. And so that's why we focus on our profits—those things that have good margins, good shelf life, and ultimately we can double down in our machines. And then with that, that ties us into our next thing is our time management. And so as we think through the inventory of the machine, we also got to think through the inventory of the warehouse. And so with our time management, we use a platform called VendHub, and the great thing about this platform called VendHub is we're able to place orders of over 8,000 SKUs. Okay, so we can literally—on a catalog on VendHub—place an order from a list of thousands of SKUs, and the great thing is that order, if we place it on Friday, let's say at 10:00 a.m., it'll show up on Monday morning. And so now—now our team and our operators aren't going to spend six hours at a Costco or a Sam's Club or a Walmart—or Celsius is in this Costco with a variety pack, but the Alani is at this Walmart over across town—we don't have to worry about anything; we literally just go in, place our orders on Friday; shows up on Monday, and we literally stock our warehouse and organize it accordingly, with drinks on—as you can see on my right—snacks on my left. But this is all about the time management strategies we do. The other thing with that strategy that we do is we're all about being efficient with our drinks. So the reason we don't like going to Costco is because when you go get Celsius at Costco—at least here in Oregon—they have variety packs, so they got the lost leader. And you're—you're probably thinking, "What the heck's the lost leader?" The lost leader is going to be that flavor they throw in that variety pack that never sells, and there's a reason they put that in there. So for us, a lot of times it happens to be, let's say, the guava Celsius flavor that never sells, but everyone loves the orange flavor. Well…
If you go buy the variety pack, you have to buy the guava with the orange. And so you might be thinking you're saving a couple extra cents because it's at Costco, but you're actually losing some dollars because the guava will never sell. That is the beauty of having an efficient inventory management system set up, so you're not getting caught up in, "Oh, I'm actually saving a dollar by going to Costco," but because it's a variety pack, you're actually losing money in the grand scheme of things.
Now that we have all the operations figured out, it's time to scale. There's two components to scaling your business: first, scaling your route through more locations; and the second one is scaling your team and your time to make the route passive. With the first one, when we talk about scaling the route, I'm a huge believer in warm intros. You're going to get a conversion from a warm intro eight times faster than 10 cold intros. So when you get those locations and you're now ready to scale, start asking for intros to sister properties. One tip we love to do: when we install a machine—shoot, yesterday we installed a machine—the property manager was on cloud nine and in their honeymoon stage of loving us, that we immediately asked for intros to the sister properties they manage in town. That is a simple trick you can use to leverage scaling your route. Think about it: you go into a school, you install at a middle school; there's going to be elementary schools you can ask for intros to below them, and then there's going to be high schools above them you can ask intros to. So always focus on land and expand versus just a shotgun approach when scaling your locations.
The second thing we're going to talk about is scaling your route through hiring employees. Now, as you know, I'm a huge believer in building processes that make things passive. And so with our vending route, I literally have two in two different states; I spend an hour per week on each route, which is just a check-in with our staff and just oversight looking at the numbers. Okay, so when you're thinking about hiring an employee, where do you find an employee? And for me, I actually hired an employee when I only had two locations, and the reason why is I wanted to hire someone part-time to ultimately make this passive. So what I did is I actually went to the gig section in Craigslist. The reason I went to the gig section is because the best part about the job you need done is it doesn't matter if it's done in the morning—aka, stocking machines in the morning—'cause your employee is an early riser, or stocking at night 'cause they're a night owl. As long as it gets done on that day you need it to get done, that's great. And so I always like to do our job ads on the gig section of Craigslist and not the normal job section, because you can get a lot of those Uber, Uber Eats, all the DoorDash, all those kind of people that just want to work when they can work as a little uh, side hustle. So what we like to do is we like to set the hourly rage—hourly wage—depending on where you live, $20 to $25 an hour. We factor in about 1.5 hours per machine a week, and that's usually two to three times stocking. Okay, so usually 45 minutes a machine; if we're doing the top-off of three times a week, it's closer to the 30 minutes per machine. So if you have two locations at 1.5 hours, right away you're looking at a total of three hours a week, okay? And then let's say we're going to spend an hour of inventory and an hour of ordering product; you're looking at 5 hours a week. You times that by four weeks. Now with those two locations, let's say they each do two grand a month, so we got 4K a month in revenue. Then we got 5 hours times, or 5 hours—20 hours a month, okay? 20 hours times 20 bucks—simple math—$400 in labor. Right away you got C—C of goods at half of that, so let's say or at 30% of that, so let's say um, $1,200. And as you can see, even with an operator, you're still pocketing upwards of 50% of those profits, which is what you want while still making the route as passive as possible. And the great thing is, because you know this is 1.5 hours per machine a week, you can literally stack that. So as you add those new locations from those warm intros to the sister properties, you can parlay them to a point where they come on full-time, and a typical operator can handle about 14 machines full-time for you without needing to hire a second or a third operator. That's how you scale your business.
All right, so now that we've dialed in how to ultimately find a location, pick the right machine, build an actual business behind your route, and then ultimately scale it, let's actually dive into the types of people that have had success doing this. So right now, I'm just going to go through a couple success stories, because what you're going to realize with the common thread with all these people is they're way more common and similar to you and I than they are studying vending their whole life, because they didn't. In fact, they have so many cool stories with a background that has a common denominator that I think you're going to enjoy. So let's dive in. The first guy I want to talk about is going to be Charles. Now Charles lives down in the south; in fact, he lives in Texas. Charles is a PE teacher and also a high school football coach. And when he came to me, he was really interested in trying to build a side hustle with some extra income outside of his W2. Charles had no vending experience; in fact, in theory, he has two jobs because he teaches during the day and then he coaches before school and after school. And the crazy thing is he still had the time to build an empire. And the thing I love about Charles's story is he doesn't want as many locations and as many machines as he can get; he wants to do high-leverage locations that are going to do high amounts of revenue. In fact, he is very, very good at saying no to locations that aren't going to do the revenue that he wants to do. He sets the bar so high with revenue that it's a model that I think more people should follow. So how much money does Charles actually make? Charles is in a college town in Texas, and he has five locations. The crazy thing is, with those five locations, he just texted me yesterday and told me he hit his first $1,000 day with his five locations. Think about that: that's $200 per machine. $200 per machine times 365 days in a year, that's over 200 grand. So Charles is literally doing freaking $1,000 a day with five locations. That is amazing. And the crazy thing is he is never scared to say no to more locations if they're not going to do over four grand a month, because that's the number he has in his head. Okay, so if we do the math on this: five locations, let's say for simple math he does $20,000 a month, that means that he's literally doing four grand per machine in revenue, which as you saw in the previous chapter, that's going to come out to be around $2,000 to $2,500 in profit. So just with five locations, and let's say he's at each location two times a week, let's even shoot high and say three times a week—three hours, one hour per loc—so he's got five locations, he's at three times a week, so that's 15 hours. And then let's say he spends another five hours stocking, or sorry, ordering inventory and his warehouse setup like we talked about in the last chapter, that's literally 20 hours a week that he's spending on a project that's bringing him in over 20 grand a month. And the best part about this is he has such a passion for teaching and coaching that he doesn't even want to replace his 9 to 5, because he just wanted to set up this income stream on the side to give him more flexibility and more freedom if teaching didn't pay enough. This is what's so exciting about Charles.
Now we're going to use a different example where we're going to talk about Jason. Jason's up in the North and the Midwest, and he's gone about this in a completely different manner. Jason wants to get as many locations as possible, and he wants to go so fast that when he started with us last year in January, he not only wanted help getting locations, but he also wanted help acquiring routes. So Jason was going after these routes for sale in his town that would speed up his route growth. And so Jason started with zero—zero vending experience. He had a full-time job when he started; he actually wanted to keep his full-time job, and he has over a 40-machine route now, doing upwards of over 30 grand a month. The crazy thing with Jason: he has four teenage kids, and this is why I love the story because it brings me back to Warren Buffett. Warren Buffett always said the best entrepreneurs he invested in always had a lemonade stand when they were kids. Well, think about it: with vending in 2025, the best entrepreneurs in 20 years are gonna have had a vending machine growing up. And so what Jason's done with his four kids is he's literally given each kid a different vending machine to pick the prices, to stock the machine with the products they want, and then compete against each other on sales to see which machine is doing the best. He's literally building generational wealth for his family with a real-life case study his teenage kids can understand. They're literally competing against each other on products they put in their machines, what to set the prices for those products, and which machine's going to do the most sales. Is there a better way to teach your kids supply and demand than how Jason's doing it with vending machines? No, it's wild and such a brilliant concept. And this is why I love what he's doing, because he started last January with us, and he's now got over 40 machines from both acquisition of routes and leads we've helped him find, and he's crushing it with over 30 grand a month in revenue just from that short amount of time.
The next student I'd like to talk about is going to be Anthony. And Anthony's very similar to Jason in that he has kids that he's all about trying to provide for them for the future. And with those kids, he's using these machines to build out their college tuition fund. Think about it: you got a machine that's doing a grand in profit every single month; you reinvest that over time. Anthony's got kids around the age of five; they're going to have hundreds of thousands of dollars. It's not going to matter where they want to go to college; they want to go to Harvard, they're going to be able to afford it because of the cash flow from these machines that 5-year-old has been helping Anthony stock for years. And this is what gets so exciting when we talk about Anthony—another gentleman in the Midwest—is he started to really parlay this into multiple different types of locations, just like we talked about in the in the chapter 2 with the type of locations. Anthony's done it in apartments; he's done it in medical facilities; he's done it in car dealerships. He literally has machines—I think he's up to over 40 machines now—that him and his kids and their family have built a route around that has built unbelievable wealth for him and for future generations of his kids and his grandkids that didn't exist before this. And the crazy thing is Anthony's background's in real estate. He literally got into this because of the uncertainty of the real estate market being too hot, not being able to find good enough deals. He was able to build generational wealth with his kids, and sure, he's put in a lot of sweat equity into this, there is no doubt about that, but he's literally set up his kids for success because of the cash flow he's building with these machines, which is really cool.
The other person I want to talk about who also had no vending experience before getting into this was Carney in the Indiana market. And the reason I love Carney is his family is a cool story. His wife was in college athletics, which anyone that's ever been a coach before knows how much of a grind it is, and Carney is a grinder himself. So they had a high demand and limited time to build a side hustle; hence why they were trying to make something as passive as possible with vending. And the thing I love about what Carney and Aaron have done is they've built a route that has been literally customer first. What I mean by that is they have crushed it with their locations that now, within a year, they're already getting referrals from current customers that they're with. And I love this concept because there's no better time to ask for a referral to another place until right at the beginning when they're in that honeymoon stage with you. And Carney and Aaron have crushed this with their route; they're in things now like police stations that have policemen come in through the night with night shifts, and these locations that just have amazing foot traffic and always need a snack or an energy drink to stay awake. And they're doing so well with that. And the crazy thing with Aaron and Carney is they had no vending experience, just just like Anthony, just like Jason, and literally just like Charles; they just wanted to provide for their family. And when I think back to the common thread with all four of these folks is they all have families, and they all want to build something that leaves generational wealth and cash flow to set up for the future—whether that's those that have younger kids like Anthony and might need help paying for daycare or private school or something for the younger kids, or someone like Jason that that's got kids that are all teenage kids that can understand supply and demand and can understand snacks and drinks and literally want to compete against each other with vending machines to ultimately pay for their college tuition that's coming right around the corner. The common thread with all four of these people: they're parents; they literally want to do whatever they can do to set up for their family, and that's what's been amazing for them. And that's what I love is because all four of those guys started with zero vending experience; they literally didn't even know where to go find a vending machine, yet alone how to set the prices, yet alone how to go talk to a lead or what types of machines to put in these locations, and they've followed the blueprint, and look—look at the success they've gotten. This is why it's so cool with vending, as you can get into it without an education or a degree around it, and you'll be successful.
Now you have the complete roadmap to start your own vending machine business in 2025. You can spend months or even years of figuring this out on your own, making costly mistakes along the way, or you can join our community of successful operators and vending preneurs, where we'll guide you step by step through the entire process. Inside vending preneurs, you'll get access to our proven systems, templates, scripts, and most importantly, a community of operators who are actively building successful vending businesses. We can even help you secure locations and negotiate deals. If you're ready to take action and fast-track your success, click the link in the description to book a call with our team. We'll show you exactly how you can build your own profitable vending machine business in the next 90 days. Thank you for watching. I'll see you in the next video. Mr. Passive signing off.